Linear Tech (LLTC) Little Changed on As-Expected Earnings

NEW YORK (TheStreet) -- Linear Technology (LLTC) was little changed over Wednesday, despite fulfilling earnings estimates. By early afternoon, shares had traced 0.56% higher to $45.44.

After the bell Tuesday, the semiconductor manufacturer reported net income of 44 cents a share for the second quarter ended Dec. 29, 2.2% lower than the preceding three-month period but 15.8% higher than the year-ago quarter. Earnings came in a penny short of consensus, according to analysts surveyed by Thomson Reuters.

Second-quarter revenue of $334.6 million was 1.7% lower than the preceding period but 9.6% higher than the year-ago quarter. Total sales were largely in line with analysts' expectations of $334.79 million in revenue.

"Our December quarter is generally a slower quarter for us as the automotive and industrial markets tend to be weaker. Though automotive continued to grow modestly, the industrial market was down for us and we ended the quarter with total revenues down sequentially 1.7%, in line with the midpoint of our guidance as the quarter generally went as expected," said CEO Lothar Maier in a statement.

The Milpitas, Calif.-based business forecasts revenue to grow 3% to 6% sequentially in the third quarter ending March. Analysts expect the company to post third-quarter net income of 48 cents a share on $346.33 million in revenue.

TheStreet Ratings team rates LINEAR TECHNOLOGY CORP as a Buy with a ratings score of A-. The team has this to say about their recommendation:

"We rate LINEAR TECHNOLOGY CORP (LLTC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, solid stock price performance, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • LINEAR TECHNOLOGY CORP reported flat earnings per share in the most recent quarter. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, LINEAR TECHNOLOGY CORP increased its bottom line by earning $1.72 versus $1.71 in the prior year. This year, the market expects an improvement in earnings ($1.92 versus $1.72).
  • The gross profit margin for LINEAR TECHNOLOGY CORP is currently very high, coming in at 79.09%. Regardless of LLTC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, LLTC's net profit margin of 31.69% significantly outperformed against the industry.
  • LLTC's share price has surged by 25.86% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, although almost any stock can fall in a broad market decline, LLTC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the Semiconductors & Semiconductor Equipment industry average, but is less than that of the S&P 500. The net income increased by 2.5% when compared to the same quarter one year prior, going from $105.18 million to $107.87 million.

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